Hiring an overseas worker? Part 2
For many years, Australia has supported overseas workers to fill short-term skills shortages in the Australian market. The Subclass 457- work visa is the most common visa that allows an employer to sponsor non-Australian employees. As of 31 March 2016, there were 97,770 primary Subclass 457 visa holders in Australia. If you are an Australian business who is an approved Standard Business Sponsor or who would like to sponsor skilled overseas workers, you have certain obligations that you will have to meet.
This article is the second part of our ‘hiring an overseas worker’ articles and is concerned with the obligations that your business have to fulfil before and once you are approved as a sponsor by the Department of Immigration.
Employer’s obligations as a Standard Business Sponsor (SBS)
Some obligations are only in place while you have an overseas worker working for you, others extend even beyond the term of your sponsorship.
This obligation has to be met by businesses trading for more than 12 months before applying for the SBS application. If the business is a newly created business trading for less than 12 months, this obligation will only need to be met once the business is approved as a Standard business sponsor. However, a training auditable plan will need to be provided to the Department of Immigration prior to lodging the application.
Additionally, this is one of the main obligations that have to be met by an approved standard business sponsor while employing a 457 visa application. Businesses have to meet this obligations for every 12 months as a commitment towards training Australian employees.
There are two benchmarks for training that can be established to comply with this obligation. As a business, you can meet either of these benchmarks.
- Training Benchmark A- 2% of total payroll expenses
Under this benchmark, employers are required to pay a minimum of 2% of their recent payroll expenditure to an industry training fund which operates in an industry related to the employer’s business. The payroll expenditure includes any wages/leave paid, superannuation and payroll tax expenses. The current policy requires payments to contractors and subcontractors to be included in the total payroll expenditure.
This benchmark is suitable for businesses that:
- Do not employ Australian citizens or permanent residents; or
- Have one Australian who is also the director of the business;
This requirement has to be met for each year of sponsored an overseas worker on a Subclass 457. If your business failed to meet this requirement for any of the years, do not panic.
- Training Benchmark B – 1% of total payroll expenses
Under this benchmark, employers are required to spend a minimum of 1% of their recent payroll expenditure (in the last 12 months) on directly training their Australian employees (citizens and permanent residents).
Some training expenditures count towards this training benchmark and some don’t.
For instance, the following expenses count towards the benchmark:
- paying for a formal course of study or training courses to your Australian staff members;
- employing apprentices, trainees or recent graduates;
- Employing a trainer in your business or paying for an external training provider to train your Australian employees.
Expenses that cannot count towards Benchmark B:
- Training undertaken by non-Australian citizens or permanent residents;
- Training over 40% of payroll expenses on the business owners/directors and their family members;
- On-the job training conducted in an unstructured manner;
- Paid study leave;
- Wages paid to staff members to attend training.
You may want to seek legal advice in relation to your training obligations requirement, which is a key obligation for an approved standard business sponsor.
There other obligations to be met by standard business sponsors such as:
- Not to ever underpay your overseas employees;
- cooperate with inspectors when they come for business visits;
- ensure equivalent terms and conditions of employment compared to your Australian staff members;
- keep records of wages paid to your employees and any leave taken including paid and unpaid leave;
- inform the Department of Immigration when certain events occur. For example, if the 457 employee stops working in your business;
- Ensure that your 457 employee only participates in the nominated occupation, program or activity and nothing else;
- not engage in discriminatory recruitment practices.
What happens if you do not meet your sponsorship obligations
If your business does not comply with your sponsorship obligations, there may be consequences to your breach. For instance, your sponsorship might get cancelled, your new sponsorship can be refused, your business may be fined and/or be banned from applying for further sponsorships for 5 years. The Department cannot simply cancel your sponsorship without first investigating any breaches and giving you the opportunity to respond to any adverse information.
Useful tips if you are an overseas employer sponsor
- If you breach your employer’s obligations, you may be banned from sponsoring future overseas workers and may also be fined.
- You must treat your overseas worker under the same conditions as your Australian staff.
- Seek legal advice before promoting your overseas worker in a higher position as this might later one harm their opportunity to apply for permanent residency.
About the authors
This article was written by Marial Lewis.
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